SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-12
Luxtec Corporation
(Name of Registrant as Specified In Its Charter)
Luxtec Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) AND 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
persuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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4) Date Filed:
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<PAGE>
LUXTEC CORPORATION
March 28, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of LUXTEC CORPORATION, to be held on Thursday, April 17, 1997, at 11:00 A.M. at
the Company's Board Room, 326 Clark Street, Worcester, Massachusetts.
The Notice of Meeting and the Proxy Statement that follow describe the
business to be considered and acted upon by the stockholders at the Meeting,
after which management will also report on the affairs of the Company.
The Board of Directors of the Company encourages your participation in
the Company's electoral process and, to that end, solicits your proxy. You may
give your proxy by completing, dating and signing the Proxy Card and returning
it promptly in the enclosed envelope. You are urged to do so even if you plan to
attend the meeting.
A copy of the Company's 1996 Annual Report to Stockholders is
simultaneously being mailed to all stockholders entitled to vote, but is not to
be considered a part of the proxy solicitation material. This Proxy Statement
and the Proxy Card were first mailed to stockholders on or about March 28, 1997.
Sincerely,
JAMES W. HOBBS
President
<PAGE>
LUXTEC CORPORATION
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 17, 1997
Notice is hereby given that the Annual Meeting (the "Meeting") of
Stockholders of Luxtec Corporation (the "Company") will be held at the Corporate
Offices of the Company located at 326 Clark Street, Worcester, Massachusetts.,
at 11:00 a.m., local time, to consider and act upon the following matters:
1. A proposal to elect two (2) Class I directors of the Company, each to
hold a three-year term.
2. A proposal to ratify the appointment of Arthur Andersen LLP as
independent public accountants of the Company.
3. A proposal to ratify the amendment of the Company's 1992 Stock
Option Plan, as amended (the "Plan"), to increase the number
of shares authorized for issuance under the Plan to 400,000.
4. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Stockholders of record at the close of business on March 17, 1997, are
entitled to notice of and to vote at the Meeting and any adjourned sessions
thereof. All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors
JAMES W. HOBBS
Director
Worcester, Massachusetts
March 28, 1997
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, COMPLETE, DATE,
SIGN AND MAIL THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY, AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED
FOR THAT PURPOSE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY
YOU AND VOTE YOUR SHARES IN PERSON.
<PAGE>
LUXTEC CORPORATION
326 Clark Street
Worcester, MA 01606
-----------------------------------
PROXY STATEMENT
March 28, 1997
-----------------------------------
This Proxy Statement (the "Proxy Statement") is being furnished to
stockholders of Luxtec Corporation, a Massachusetts corporation ("Luxtec" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of Luxtec Corporation (the "Luxtec Board"), for use at the 1997 Annual
Meeting of Stockholders of the Company, including any adjournments or
postponements thereof (the "Meeting"), scheduled to be held on Thursday, April
17, 1997, at 11:00 A.M. in the Company's Board Room, 326 Clark Street,
Worcester, Massachusetts. This Proxy Statement relates to the election of Class
I Directors of Luxtec, the ratification of the appointment of Arthur Andersen
LLP as the independent public accountants of Luxtec, and the amendment of
Luxtec's 1992 Stock Option Plan, as amended (the "Plan"), each of which is
described herein. This Proxy Statement was first mailed to Luxtec Stockholders
on or about March 28, 1997. All solicitation expenses, including costs of
preparing, assembling and mailing proxy material, will be borne by the Company.
With respect to the Meeting, the close of business on March 17, 1997,
has been established as the record date for determining the stockholders
entitled to notice of and to vote at the Meeting and at any adjournments or
postponements thereof. As of the record date, there were issued and outstanding
and entitled to vote 2,849,657 shares of Luxtec common stock, par value $0.01
per share ("Common Stock"). Holders of shares of Luxtec Common Stock are
entitled to one vote for each share owned at the record date on all matters to
come before the Meeting and any adjournments or postponements thereof. The
presence in person or by proxy of holders of a majority of the shares of Luxtec
Common Stock entitled to vote at the Meeting constitutes a quorum for the
transaction of business.
In connection with the Meeting, any proxy may be revoked at any time
before it is voted by written notice received by the Clerk of Luxtec or by
attending the Meeting and voting in person; but if not so revoked, the shares
represented by such proxy will be voted. Attendance at the Meeting will not by
itself constitute revocation of a proxy unless the stockholder so attending so
notifies the Clerk of Luxtec in writing at any time prior to the voting of the
proxy. All proxies will be voted in accordance with the instructions contained
therein. If no choice is specified for one or more proposals in a proxy
submitted by or on behalf of a stockholder, the shares represented by such proxy
will be voted in favor of such proposals and in the discretion of the named
proxies with respect to any other proposals which may properly come before the
Meeting. Broker non-votes (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or the
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) and proxies that withhold
authority to vote for election as a director or that reflect abstentions will be
deemed present for the purpose of determining the presence of a quorum for the
transaction of business. With respect to Proposals 1 (election of Directors) and
2 (ratification of appointment of accountants), broker non-votes and abstentions
will have no effect on the outcome of voting on such proposals. With respect to
Proposal 3 (amendment of the Plan), a broker non-vote will have no effect on the
outcome of voting on such proposal and an abstention will have the effect of
voting against such proposal.
The Luxtec Board does not know of any matters which will be brought
before the Meeting other than those matters specifically set forth in the Notice
of Meeting. However, if any other matter properly comes before the Meeting, it
is intended that the persons named in the enclosed form of Proxy, or their
substitute acting thereunder, will vote on such matter in accordance with their
best judgment.
A representative of Arthur Andersen LLP is expected to be present at
the Meeting. This representative is expected to be available to respond to
appropriate questions.
---------------------------
<PAGE>
AVAILABLE INFORMATION
Luxtec is subject to the reporting requirements of the Exchange Act,
and in accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information concerning Luxtec may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as the following regional offices: 7 World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60604.
This Proxy Statement incorporates by reference certain documents which are
not presented herein or delivered herewith. Upon written or oral request, Luxtec
will provide without charge to each person to whom a copy of this Proxy
Statement is delivered a copy of the documents incorporated by reference herein
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference therein). Requests should be submitted in writing or
by telephone at (508) 856-9454 to Samuel M. Stein, Luxtec Corporation, 326 Clark
Street, Worcester, Massachusetts 01606-1214. In order to ensure timely delivery
of the documents, any request should be made by March 26, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Proxy Statement:
1. Luxtec's Annual Report on Form 10-K, for the year ended October 31,
1996.
2. The description of the Luxtec Common Stock contained in its
Registration Statement on Form 8-A (File No. 33-83510) filed on
April 4, 1994.
3. Luxtec's Quarterly Report on Form 10-Q for the period ended January
31, 1997.
4. All other reports filed pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act since October 31, 1996.
All documents subsequently filed by Luxtec pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the date of Meeting shall be
deemed to be incorporated by reference into this Proxy Statement and to be part
of this Proxy Statement from the date of filing thereof. Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated herein modifies or replaces such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Proxy Statement.
This Proxy Statement is accompanied by copies of Luxtec's Annual Report on
Form 10-K, for the year ended October 31, 1996, Luxtec's quarterly report on
Form 10-Q for the period ended January 31, 1997, and Luxtec's 1996 Annual Report
to Stockholders.
<PAGE>
PROPOSAL 1
ELECTION OF LUXTEC DIRECTORS
Section 50A of Chapter 156B of the Massachusetts General Laws provides for
Board of Directors of such number as is fixed by the directors, and which is
divided into three classes serving staggered three-year terms. The Luxtec Board
has fixed the number of Directors at seven (7). At the Meeting, the terms of the
members of Class I, Louis C. Wallace and Patrick G. Phillipps, expire. Mr.
Wallace and Mr. Phillipps are the only nominees for election as Class I
Directors for a term to expire at the 2000 Annual Meeting of Stockholders.
Unless authority is withheld, it is the intention of the persons voting
under the enclosed proxy to vote such proxy in favor of the election of Mr.
Wallace and Mr. Phillipps to be directors of the Company until the 2000 Annual
Meeting of Stockholders and until their successors are elected and qualified.
The affirmative vote of a majority of the shares of Luxtec Common Stock present
or represented by proxy, and entitled to vote at the Meeting is required for the
election of Mr. Wallace and Mr. Phillipps.
The current members of Class II, with a term expiring at the 1998 Annual
Meeting of Stockholders are Mr. Paul Epstein and Mr. James Hobbs. The members of
Class III, with a term expiring at the 1999 Annual Meeting of Stockholders, are
Dr. Thomas J. VanderSalm, Mr. James J. Goodman and Mr. James Berardo.
The table beginning on the following page sets forth , with respect to the
members of the Luxtec Board and management of the Company, (i) the name, age and
length of service as a director or executive officer, (ii) the principal
occupation and business experience of such person for at least the past five
years, (iii) the names of other companies of which such person currently serves
as a director or executive officer, and (iv) the amount and percentage of Luxtec
Common Stock owned by each such person as of March 11,1997. The address for each
person listed below is c/o the Company at 326 Clark Street, Worcester,
Massachusetts 01606-1214.
<PAGE>
<TABLE>
<CAPTION>
(1) Amount of Percent of Common
Position and Offices with the Company and Other Business Common Stock Stock Outstanding
Name Experience During Last Five Years Owned Directly
- --------------------------- ------------------------------------------------------------ ------------------- -------------------
<S> <C> <C> <C>
James Berardo James Berardo has been a Director of the Company since 156,520 (2) 5.49%
Age 37 1995. Mr. Berardo currently serves as President of
Darlco, Inc., a real estate development and investment
management company. Mr. Berardo joined Darlco in 1986,
serving in various financial capacities prior to assuming
his current position in March 1995. Mr. Berardo is a
member of the Audit and Compensation Committees of the
Board of Directors.
Paul Epstein Paul Epstein joined the Company in 1995 as Vice President 166,894 (3) 5.86%
Age 66 of Business Development and Strategic Planning and as a
Director. Mr. Epstein, a co-founder of CardioDyne, Inc.,
served as Chairman, Vice President and Chief Financial
Officer from the time of CardioDyne's founding in February
1989 until the merger with Luxtec in October 1995.
Previously, Mr. Epstein co-founded Electronic Image
Systems Corporation, Brattle Instrument Corporation and,
most recently, Omni-Flow, Inc., which introduced the first
multiple medication, programmable infusion pump and was
acquired by Abbott Laboratories in 1989. Mr. Epstein
holds B.S. and M.S. degrees in Chemical Engineering and a
B.S. degree in Business Management from MIT. Mr. Epstein
has been jointly awarded eleven patents in the medical
instrumentation and communication fields. Mr. Epstein is
a member of the Audit Committee of the Board of Directors.
James J. Goodman James J. Goodman has been a Director of the Company since 450,000 (4) 13.64%
Age 38 1996. Since its founding in 1993, Mr. Goodman has been
President of Geneva Middle Market Investors, L.P., a
private firm that invests in emerging growth companies
across a wide range of industries with revenues of $10 -
$50 million, based in Wellesley, MA. Mr. Goodman was a
Vice President at Berkshire Partners, a middle market
buyout firm, from 1989 to 1993. Mr. Goodman was educated
at Harvard University where he received his undergraduate
degree in Economics in 1979 and M.B.A. and J.D. degrees in
1984. Mr. Goodman is a member of the Compensation
Committee of the Board of Directors.
<PAGE>
(1) Amount of Percent of Common
Position and Offices with the Company and Other Business Common Stock Stock Outstanding
Name Experience During Last Five Years Owned Directly
- --------------------------- ------------------------------------------------------------ ------------------- -------------------
James W. Hobbs James W. Hobbs was elected to the positions of President, 112,855 3.86%
Age 48 Chief Executive Officer and Director in 1993. Mr. Hobbs
was Chief Executive Officer of Graylyn Associates from
1992 to 1993. Graylyn was an investment firm founded by
Mr. Hobbs to invest in early stage medical technology.
Prior to Graylyn, Mr. Hobbs served as the President and
Chief Executive Officer of Genica Pharmaceuticals from
1990 to 1992. Genica Pharmaceuticals was a corporation
engaged in providing new diagnostic assays and conducting
therapeutic research for neurological disorders. Mr.
Hobbs was with Johnson and Johnson Professional
Diagnostics as Vice President and General Manager from
1985 to 1989. Mr. Hobbs is a member of the Nominating
Committee of the Board of Directors.
David Mutch David Mutch is Vice President of Sales and Marketing of 28,023 *
Age 53 the Company. Mr. Mutch joined the Company in September
1992 as Director of Sales and Marketing and assumed his
present position in December 1994. Previously, Mr. Mutch
held various management positions with Hewlett Packard
Company over a twenty-one year career. During his last
five years at Hewlett Packard, Mr. Mutch was the Marketing
Manager for the Health Care Information Systems Division.
Patrick G. Phillipps Patrick Phillipps joined the Company in 1995 as Vice 241,732 (5) 8.46%
Age 51 President of Engineering and a Director. Mr. Phillipps, a
co-founder of CardioDyne, Inc., served as President
and Chief Executive Officer from the time of
CardioDyne's founding in February 1989 until the
merger with Luxtec in October 1995. Previously, Mr.
Phillipps founded the Engineering Department of
Lifeline Systems, Inc., where he served as Vice
President of Engineering and oversaw the development
and introduction of a new generation of Lifeline's
hospital based emergency call system for home use by
the elderly. Mr. Phillipps holds an S.B. Degree in
Electrical Engineering from MIT and has been jointly
awarded over a dozen patents in the medical
monitoring and related fields. Mr. Phillipps is a
member of the Nominating Committee of the Board of
Directors.
<PAGE>
(1) Amount of Percent of Common
Position and Offices with the Company and Other Business Common Stock Stock Outstanding
Name Experience During Last Five Years Owned Directly
- --------------------------- ------------------------------------------------------------ ------------------- -------------------
Samuel M. Stein Samuel Stein is Vice President, Chief Financial Officer, 9,045 *
Age 57 Treasurer and Assistant Clerk of the Company. Mr. Stein
joined the Company in October 1993 as Vice President
of Finance and Chief Financial Officer and was
elected to the further offices of Treasurer and
Assistant Clerk during 1994. From 1990 to 1993, Mr.
Stein was employed as the Corporate Controller of
Great American Software, Inc., an accounting
software manufacturer.
Thomas J. Vander Salm Dr. Thomas Vander Salm has been a Director of the Company 48,700 (6) 1.71%
Age 56 since 1984. Dr. Vander Salm is Chief of Cardio Thoracic
Surgery and has been a Professor of Surgery at the
University of Massachusetts Medical School in Worcester,
MA since 1970. Dr. Vander Salm is a member of the Audit
and Nominating Committees of the Board of Directors.
Louis C. Wallace Louis C. Wallace has been a Director of the Company since 37,250 1.31%
Age 56 1989. Mr. Wallace is the founder and President of
Specialty Surgical Instrumentation, Inc. (S.S.I.), a
manufacturer and distributor of surgical instruments.
S.S.I. was established in Nashville, TN in 1976. Mr.
Wallace is a member of the Compensation and Nominating
Committees of the Board of Directors.
Nominees, directors and 1,251,019 36.82%
officers as a group (9 persons)
=======================================================================================
* Indicates less than 1.0%
</TABLE>
(1) Shares of Common Stock subject to options or warrants exercisable as of
March 11, 1997 (or exercisable within 60 days after such date), are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such option or warrant but are not outstanding for purposes
of computing the percentage of any other person. Unless otherwise indicated
in these footnotes, each stockholder has sole voting and investment power
with respect to the shares beneficially owned.
(2) Mr. Berardo owns, as trustee of various trusts, 154,520 shares of the
Company's Common Stock.
(3) Mr. Epstein owns 84,676 shares in his name and is the beneficial owner
of 82,218 shares in the name of his wife, Mary Epstein.
(4) Mr. Goodman is the President of Geneva Middle Market Investors, L.P. and
is deemed to be the beneficial owner of the 450,000 shares issuable to
GMMI upon exercise of a warrant.
(5) Mr. Phillipps owns 126,493 shares in his name and is the beneficial
owner of 106,905 shares in the name of his wife, Janice B. Phillipps.
(6) The 48,700 shares of the Company's Common Stock owned of record and
beneficially by Thomas J. Vander Salm includes 32,000 shares of the
Company's Common Stock owned of record by the trustees of the Vander Salm
Family Trust, of which he may be deemed to be a beneficial owner.
<PAGE>
The following table sets forth as of March 11, 1997, the name of each
person who, to the knowledge of the Company, owned beneficially more than 5% of
the shares of Common Stock of the Company outstanding at such date, the number
of shares owned by each of such persons and the percentage of the outstanding
shares represented thereby.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage of Common
of Beneficial Owner Beneficial Ownership (1) Stock Outstanding
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James Berardo 156,520 (2) 5.49%
6624 Fannin Suite 2700
Houston, TX 77030
Denton A. Cooley, MD 419,046 14.54%
6624 Fannin, Suite 2700
Houston, TX 77030
Paul Epstein 166,894 (3) 5.86%
95 Clinton Road
Brookline, MA 02146
G&G Diagnostics Fund, L.P. I & L.P. III 209,484 7.27%
30 Ossipee Road
Newton, MA 02164
Geneva Middle Market Investors, L.P. 450,000 (4) 13.64%
70 Walnut Street
Wellesley, MA 02181
Rita Kloots 155,100 5.44%
Box 1077
Sturbridge, MA 01566
Patrick G. Phillips 241,732 (5) 8.46%
224 Old County Road
Lincoln, MA 01773
</TABLE>
(1) Shares of Common Stock subject to options or warrants exercisable as of
March 11, 1997 (or exercisable within 60 days after such date), are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such option or warrant but are not outstanding for purposes
of computing the percentage of any other person.
(2) Mr. Berardo owns, as trustee of various trusts, 154,520 shares of the
Company's Common Stock.
(3) Mr. Epstein owns 84,676 shares in his name and is the beneficial owner
of 82,218 shares in the name of his wife, Mary Epstein.
(4) Consists of shares issuable to GMMI upon exercise of a warrant.
(5) Mr. Phillipps owns 126,493 shares in his name and is the beneficial
owner of 106,905 shares in the name of his wife, Janice B. Phillipps.
<PAGE>
Board of Directors Meetings and Committees
During the fiscal year ended October 31, 1996, (the "1996 Fiscal Year"),
the Luxtec Board held five (5) meetings. During the 1996 Fiscal Year, each
incumbent director attended at least 75% of the aggregate of the number of
meetings of the Luxtec Board and the total number of meetings held by all
committees on which the individual served.
The Audit Committee presently is composed of three directors: James
Berardo, Paul Epstein and Thomas J. VanderSalm. Responsibilities of this
committee include engagement of independent auditors, review of audit fees,
supervision of matters relating to audit functions, review and setting of
internal policies and procedures regarding audits, accounting and other
financial controls, and reviewing related party transactions. During the 1996
Fiscal Year, the Audit Committee met two (2) times.
The Compensation Committee presently is composed of three directors: James
Berardo, James J. Goodman and Louis C. Wallace. Responsibilities of this
committee include approval of remuneration arrangements for executive officers
of the Company, review and approval of compensation plans relating to executive
officers and directors, including grants of stock options and other benefits
under the Company's stock option plan, and general review of the Company's
employee compensation policies. None of the members of the Compensation
Committee has been an employee of the Company at any time and none has any
relationship with either the Company or the Company's officers requiring
disclosure under applicable regulations of the Securities and Exchange
Commission. During the 1996 Fiscal Year, the Compensation Committee met three
(3) times.
The Nominating committee presently is composed of four directors: James
Hobbs, Patrick Phillipps, Thomas VanderSalm and Louis Wallace. The
responsibility of this committee is to recommend new members of the Board of
Directors when a vacancy exists. During the 1996 Fiscal Year, the Nominating
Committee met one (1) time.
Executive Compensation
The table below sets forth certain compensation information for the fiscal
years ended October 31, 1996, 1995 and 1994 of those persons who were at October
31, 1996: (i) the Chief Executive Officer, and (ii) the most highly compensated
executive officers whose total annual salary and bonus exceeded $100,000
(collectively, the "Named Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Long-Term
Compensation Compensation Awards
------------------------------- -----------------------------------------
Name and Fiscal All Other
Principal Position Year Salary($) Bonus($) Options (#) Compensation ($)
------------------ ----- --------- -------- ----------- ----------------
<S> <C> <C> <C> <C>
James Hobbs 1996 $170,474 $21,400 0 --
President, CEO and Director 1995 $154,827 -- 50,000 --
1994 $154,903 $23,500 0 --
Samuel M. Stein 1996 $95,760 $15,438 0 --
CFO and Treasurer 1995 $86,716 -- 40,000 --
1994 $83,366 $21,750 0 --
David Mutch 1996 $95,760 $15,438 0 --
VP Marketing and Sales 1995 $86,827 -- 40,000 --
1994 $83,768 $21,750 0 --
Patrick G. Phillipps 1996 $95,760 $15,438 0 --
VP Engineering 1995 -- -- 0 --
1994 -- -- 0 --
</TABLE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted pursuant to the Company's 1992 Stock Plan,
as amended, during the fiscal year ended October 31, 1996, to the Named Officers
listed in the Summary Compensation Table above.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Company's Common Stock granted under the 1992 Stock Option Plan, as
amended, including (i) the number of shares purchased upon exercise of options
in the most recent fiscal year, (ii) the net value realized upon such exercise,
(iii) the number of unexercised options outstanding at October 31, 1996, and
(iv) the value of such unexercised options at October 31, 1996:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OCTOBER 31, 1996 OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised
Unexercised Options at October In-The-Money Options at October
31, 1996 (#) 31, 1996 ($)
- ----------------- --------------- ----------------- ----------------------------------- ----------------------------------
Shares
Acquired on Value Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable/Unexercisable (1)
- ----------------- --------------- ----------------- --------------- ------------------- ----------------------------------
<S> <C> <C> <C> <C>
James Hobbs - - 40,000 60,000 $100,000 $25,000
Samuel Stein - - 6,000 44,000 $12,720 $8,480
David Mutch - - 6,000 44,000 $12,720 $8,480
</TABLE>
================================
(1) Value is based on the closing sale price of the Common Stock as of October
31, 1996, ($3.75) minus the exercise price.
<PAGE>
Executive Employment Agreements
The Company has entered into an employment agreement with James W. Hobbs,
pursuant to which the Company has agreed to employ Mr. Hobbs as President and
Chief Executive Officer. The agreement with Mr. Hobbs was entered into on June
10, 1993 with an initial term of one year with automatic renewals for successive
terms of one year each unless either party gives notice of intention not to
renew. The Compensation Committee of the Luxtec Board set Mr. Hobbs' base salary
for 1996 at $168,500 and for 1997 at $173,740. Mr. Hobbs is entitled to receive
an annual bonus in cash and/or equity of the Company from an annual bonus pool
based, in Fiscal Year 1996, on 1.9% of the net sales of the Company, with such
bonus to be determined by the Compensation Committee. Factors taken into account
by the Compensation Committee in determining bonuses include return on
investment, net sales, and net income compared to the business plan. Although
there is no maximum percentage bonus, 30% of base salary is the expected
guideline. Mr. Hobbs is entitled to severance pay in an amount equal to six
months of his then current annual salary if his employment is terminated by (i)
the Company without cause or (ii) Mr. Hobbs for Good Reason (as defined in the
agreement).
Director Compensation
The Company pays non-employee directors $500 for attendance at each
meeting of the Luxtec Board, $250 per each meeting of a committee thereof ($150
per meeting of a committee if such meeting is concurrent with a regular meeting
of the Luxtec Board), and $100 per meeting held by telephone conference. The
Company also pays expenses for attendance at meetings of the Luxtec Board and
committees thereof. Additionally, non-employee Directors are compensated with
options to purchase shares of Common Stock of the Company, in accordance with
the 1995 Stock Option Plan For Non-Employee Directors.
REPORTS OF BENEFICIAL OWNERSHIP
Based solely on a review of reports furnished to the Company or written
representations from the Company's directors and executive officers, the Company
believes that all reports required to be filed pursuant to Section 16 of the
Exchange Act were satisfied by the Company's directors, executive officers and
ten percent (10%) holders during the 1996 fiscal year.
CERTAIN TRANSACTIONS
Mr. Louis C. Wallace is currently, and has been since 1989, a member of
the Board of Directors of the Company. Mr. Wallace is the founder and President
of Specialty Surgical Instrumentation, Inc. ("SSI), a surgical distributor in
ten (10) southeastern states. SSI is the largest single customer of the Company,
representing approximately twelve percent (12%) of net sales during fiscal 1996.
SSI and the Company operate at arms length with a contract substantially the
same as the other domestic distributors of the Company's products. The Company
expects that SSI will represent approximately the same percentage of net sales
during fiscal 1997 as occurred during fiscal 1996.
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Arthur Andersen LLP, independent certified public accountants, have been
auditors of the Company since 1991. The Luxtec Board has recommended that the
stockholders ratify the reappointment of Arthur Andersen LLP as the Company's
auditors for the current fiscal year.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will be available to answer any appropriate questions.
The Luxtec Board recommends that the shareholders vote "FOR" the proposal
to ratify the appointment of Arthur Andersen LLP, and the enclosed proxy will be
so voted unless a contrary vote is indicated. The affirmative vote of the
holders of a majority of the shares of Luxtec Common Stock represented in person
or by proxy, and voting, at the Luxtec Meeting is required to ratify the
appointment of Arthur Andersen LL. In the event the appointment of Arthur
Andersen LLP should not be approved by the shareholders, the Luxtec Board will
make another appointment to be effective at the earliest possible time.
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PROPOSAL 3
AMENDMENT OF THE COMPANY'S 1992 STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED FOR ISSUANCE UNDER THE PLAN
The Luxtec Board has authorized, subject to stockholder ratification, an
increase in the number of shares available under the Company's 1992 Stock Option
Plan, as amended, (the "1992 Stock Plan") from 300,000 to 400,000 shares.
Purpose. The purpose of the 1992 Stock Plan is to attract and retain the
best available personnel for positions of substantial responsibility and to
provide additional incentives to employees of the company. The purpose of the
proposed amendment is (i) to provide the Company with additional capacity to
award stock options to existing personnel and to attract qualified new employees
through grants of stock options , and (ii) to ensure that the 1992 Stock Plan
complies with recent changes to the Internal Revenue Code of 1986, as amended
(the "Code"), relating to executive compensation.
Administration. The 1992 Stock Plan is administered by the Compensation
Committee (the "Committee") which consists of directors of the Company appointed
by its Board of Directors. The Committee is currently composed of Mr. Wallace,
Mr. Berardo and Mr. Goodman. Subject to the provisions of the 1992 Stock Plan,
the Committee has discretion to determine when awards are made, which employees
are granted awards, the number of shares subject to each award and all other
relevant terms of the awards. The Committee also has broad discretion to
construe and interpret the 1992 Stock Plan and adopt rules and regulations
thereunder.
Eligibility. Pursuant to the 1992 Stock Plan, Options, Awards and
Purchases (collectively "Stock Rights") may be granted to persons who are
directors, officers, employees and consultants of the Company. Incentive stock
options ("ISOs") may only be granted to employees and officers. Non-qualified
stock options (collectively with ISOs, "Options") may be granted to directors,
officers, employees and consultants of the Company. Awards of stock in the
Company ("Awards"), and opportunities to make direct purchases of stock in the
Company ("Purchases"), may be granted to directors, officers, employees and
consultants of the Company.
Shares Subject to the 1992 Stock Plan. The shares issued or to be issued
under the 1992 Stock Plan are shares of Luxtec Common Stock, which may be newly
issued shares or shares held in the treasury or acquired in the open market.
Previously, no more than 300,000 shares could be issued under the 1992 Stock
Plan and no individual can be granted more than 100,000 options in any calendar
year. The foregoing limits are subject to adjustment for stock dividends, stock
splits or other changes in the Company's capitalization.
Stock Options. The Committee in its discretion may issue stock options
which qualify as ISOs under the Code or non-qualified stock options. The
Committee will determine the time or times when each Option becomes exercisable,
the period within which it remains exercisable and the price per share at which
it is exercisable, provided that no Option shall be exercised (i) more than 10
years after it is granted, and (ii) more than 5 years from the date of grant for
ISOs granted to employees owning stock possessing more than 10% of the total
combined voting power of the stock of the Company, and further provided that the
exercise price of ISOs may not be less than the fair market value of Luxtec
Common Stock on the date of the grant. The reported closing price of Luxtec
Common Stock by the American Stock Exchange ("AMEX") on February 28, 1997, was
$3.25 per share.
Stock Rights are not assignable or transferable except upon the death of
the grantee. Stock Rights may be exercised only by the grantee during the
grantee's lifetime, and with respect to ISOs, only while the grantee is employed
by the Company and for three months thereafter or six months after the death of
the grantee by the administrator of the estate of such grantee.
As of October 31, 1996, Stock Rights for the purchase of a total of
235,900 shares of Luxtec Common Stock were outstanding under the 1992 Stock
Plan, 47,180 of which were exercisable, and Stock Rights to purchase an
additional 64,100 shares remained available for grant under the 1992 Stock Plan.
Stock Rights granted are exercisable at varying dates. In general, options
granted vest 20% at date of grant, and 20% each year thereafter for a period of
four years. Other performance-based options will vest at a rate of 20% each year
for a period of five years, commencing on the sixth year from the date of grant,
subject to acceleration if certain financial milestones are achieved.
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Federal Income Tax Rules. The grant of an ISO or a non-qualified stock
option will not result in income for the optionee or in an income tax deduction
for the Company.
The exercise of a non-qualified stock option will generally result in
taxable income to the optionee and deduction for the Company, in each case
measured by the difference between the purchase price and the fair market value
of the shares of Luxtec Common Stock determined generally at the time of
exercise at which time income tax withholding will be required.
The exercise of an ISO will not result in income for the optionee if the
optionee is an employee of the Company or one of its subsidiaries from the date
of grant until three months before exercise. The excess of the market value on
the exercise date over the purchase price is an item of tax preference,
potentially subject to the alternative minimum tax. Provided the optionee does
not dispose of the shares of Luxtec Common Stock within two years of the date of
grant and one year after exercise, any gain on a disposition of the shares will
be taxed to the optionee as long-term capital gain and the Company will not be
entitled to a deduction. If the Optionee disposes of the shares prior to the
expiration of either of the holding periods, the optionee will recognize taxable
income and the company will be entitled to a deduction equal to the lesser of
(i) the fair market value of the shares on the exercise date minus the purchase
price or (ii) the amount realized on disposition minus the purchase price. Any
gain greater than the taxable income portion will be treated as long term or
short term capital gain.
The following table sets forth as of October 31, 1996, the number of
options granted under the 1992 Stock Plan to the persons and groups listed.
Option Grants under the 1992 Stock Plan
Name Options (Shares)
- ---- ----------------
James W. Hobbs . . . . . . . . . . . . . . . . . . . . . . . . . . .100,000
All executive officers as a group . . . . . . . . . . . . . . . . .200,000
All directors, excluding executive officers, as a group . . . . . . -0-
All employees, excluding executive officers, as a group . . . . . . 35,900
The Luxtec Board recommends that the shareholders vote "FOR" the proposed
amendment of the 1992 Stock Plan and the enclosed proxy will be so voted unless
a contrary vote is indicated. The affirmative vote of the holders of a majority
of the shares of Luxtec Common Stock represented in person or by proxy, and
voting, at the Luxtec Meeting is required for approval of the amendment of the
1992 Stock Plan.
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STOCKHOLDER PROPOSALS
The Luxtec Board will make provision for presentation of proposals by
shareholders at the 1998 Annual Meeting of Stockholders (or special meeting in
lieu thereof) provided such proposals are submitted by eligible shareholders who
have complied with the relevant regulations of the Securities and Exchange
Commission. Such proposals must be received by the Company no later than
December 31, 1997, to be considered for inclusion to the Company's proxy
materials relating to that meeting.
GENERAL
The management of the Company knows of no matter other than the foregoing
to be brought before the Luxtec Meeting. However, the enclosed proxy gives
discretionary authority in the event any additional matters should be presented.
The Company will provide free of charge to any stockholder from whom a
proxy is solicited pursuant to this Proxy Statement, upon written request from
such stockholder, a copy of the Company's annual report filed with the
Securities and Exchange Commission on Form 10-K for the Company's fiscal year
ended October 31, 1996. Requests for such report should be directed to Luxtec
Corporation, 326 Clark Street, Worcester, Massachusetts 01606-1214, Attention:
Chief Financial Officer.
The Company expects to hold its next stockholder meeting on or about April
16, 1998, and proxy materials in connection with that meeting are expected to be
mailed approximately 30 days prior to the meeting.
JAMES W. HOBBS
President
